Many consumers are concerned about the future worth of their homes. Some fear that the recent surge in property prices may result in a repeat of the housing crash 15 years ago.

However, experts assert that the market has shifted dramatically in recent years. For instance, Odeta Kushi, First American's Deputy Chief Economist, tweeted about this issue just last week:

“. . . We do need price appreciation to slow today (it’s not sustainable over the long run) but high price growth today is supported by fundamentals- short supply, lower rates & demographic demand. And we are in a much different & safer space: better credit quality, low DTI [Debt-To-Income] & tons of equity. Hence, a crash in prices is very unlikely.”

Price appreciation will slow from the market's double-digit gains over the last two years. However, experts believe that home values would remain stable (where a home would lose value).

To this point, Pulsenomics has just released its latest Home Price Expectation Survey — a poll of over 100 economists, real estate specialists, and investment and market strategists. It forecasts continued appreciation in housing values over the next five years. The following table summarizes the predicted year-over-year growth rates in home prices based on the average of all 100+ projections:

·        2022: 9%

·        2023: 4.74%

·        2024: 3.67%

·        2025: 3.41%

·        2026: 3.57%

Those responding to the survey believe home price appreciation will still be relatively high this year (though half of what it was last year), and then return to more normal levels over the next four years.

What Does This Mean for You as a Buyer?

With a limited number of homes for sale with both prices and mortgage rates increasing,  it can be a challenging market to navigate as a buyer.  However, purchasing a home sooner rather than later has a number of advantages. If you wait to purchase, you will pay a higher price in the future. However, if you buy now, you’ll actually be in the position to make future price increases work for you.  Once you've purchased, those rising home prices will help you build your home’s value, and by extension, your own household wealth through home equity.

As an example, let’s assume you purchased a $1,000,000 home in January of this year (the average price of homes here in the Conejo Valley). If you factor in the forecast for appreciation from the Home Price Expectation Survey, you could accumulate over $267,619 in household wealth over the next five years (see graph below):

Bottom Line

If you decide whether to buy now or wait, the critical factor is understanding what's predicted to happen to home prices. Prices, experts predict, will continue to rise in the coming years, but at a slower rate. Therefore, if you're ready to buy, now may be the most fantastic time for your budget. Additionally, you'll have the opportunity to leverage future home price increases to increase your net worth through rising equity. If you're ready to get started, contact me today.